I'm wondering whether or not I've done the right thing as a contractor. Basically I'm in to my 3rd month, and my current client messed up the payment in the first month, and I just found out that they are again late in paying me for my 2nd month.

It wouldn't be so bad if I wasn't in a bit of a financial situation due to this being my first contract experience. But as a matter of principal, I walked out on them and will be telling them that I will not be going back in until they resolve the pay.

Part of me feels as though this was not a very professional thing to do, but I also don't feel that it was very professional for them to mess my payments up, twice in a row.

Did I make the right decision? I still want to work for these guys and enjoy the job, but I have a life to attend to that requires finances and I can't afford to keep getting messed up with pay like this.

I attempted to phrase the question to be oriented around contractors behaviour around clients that mis-treat them, and as some of the answers that have been posted so far, it's a good discussion. The answers coming in are great around different subjective situations.

Update:

In answer to some of the responses, the set-up is Me -> Umbrella Company -> Client. I am an employee of the Umbrella Company who's terms are that I do not get paid unless the client paid up. Thus, when I found out that the client was going to be late paying the Umbrella company, I was quite upset.

Also, I do believe that in THIS instance, it was a bad move to have simply walked out. The most professional way to handle it would have been to have made my issues known to my immediate manager and then let him resolve it, instead, his boss and others found out way before him and he was left with crap to deal with, with no chance of handling it before it got out of control.

If I was still unhappy with their solution, then I could of told the Umbrella Company that I wasn't happy and was prepared to walk out, which then they could of advised me in a more professional way what my options were. Later which I found out, there were lots of other more professional ways of handling this. However, I've not contracted for long and had a very emotional response to the situation that I've not been in before. I'm positive that a more professional and mature response would have been anything but simply walking out, creating a difficult situation for my boss and now other people in the company and myself.

Absolutely great answers so far. Thank you all for your experienced advice.

@MeshMan As a rule any interesting or worthwhile question is discouraged on stack exchange. It is all part of master plan.
–
GauravMar 10 '11 at 12:44

8

@Matt Ellen - I think a lot of people on this site are too quick to close questions and comment about them being closed. Many questions that get closed or threatened with closing end up generating good/productive dialog, and that means the community in general believes the question is of merit.
–
Joel EthertonMar 10 '11 at 12:55

2

@Joel - Just because there is dialog doesn't mean it's a good question. If this site turns into flame war zones, how many people here that say too many questions are closed are still going to support the site when it becomes disorganized and unmanaged? My guess is those people will be the first to leave. The owners never intended this to become a debate forum.
–
jmort253Mar 10 '11 at 14:53

3

@jmort253 - If you read my comment carefully, you'll see that what I said was "generating good/productive dialog". I fail to see how good/productive dialog could indicate anything other than a good question. Just generating dialog isn't a criteria, and I think we can agree that flames/arguments simply aren't "good/productive dialog". Your point is well given, but it has no relevance in relation to my comment based on this simple qualifier.
–
Joel EthertonMar 10 '11 at 15:49

10 Answers
10

I don't believe you did the right thing, honestly. If you truly enjoy the job and want to work for these people, you would not have resorted to burning a bridge with them. Pay issues are always tricky, and it's not terribly professional for them to have botched your pay in the first place, but the question also relates to a definition of severity. Did they botch your pay through some administrative (re: fixable) situation or is the company having financial difficulty and unable to pay? If it is simply administrative, you should have brought the issue to their attention, asserted the importance/severity of the problem and allowed them to address your concerns in a more suitable and professional manner. By walking out, you have shown yourself to be completely self-serving and not particularly dependable (in their eyes). It does not matter that you had a good reason for walking out, they will only notice that when the chips were down you were not there. Contracting in this manner is a very political game, and in politics perception is everything. It doesn't matter what the truth is, it only matters how they perceive it.

On the other hand, if your pay was botched because of financial difficulty, creative accounting or any number of other underhanded financial tricks that many companies pull just to avoid spending the extra dollar right this minute then you've made the absolutely right decision. This would not be a client you want to have. The problem will only continue and worsen until you are essentially working for free.

I believe you should always value your work, and you should never let anyone take you for granted. The contracting game must be handled with a little more delicacy in demeanor though. Sometimes a little patience and understanding can breed a good business relationship, particularly if the company you're working for is made aware of the situation they've put you in and learned that you stuck with them through it. Think of it this way: How far would you go for someone who did that for you?

All of that being said, if you're experiencing financial difficulty then contracting may not be the ideal option for you. You need to be able to budget these little fiascos into your life. Not everyone will be able to pay you immediately. They're not bad customers, they just don't have the luxury of paying right this minute. If you can't handle a 60-day swing in pay, you may not survive long as an independent contractor, and you may consider trying to latch onto a larger contracting firm that can broker jobs for you.

So, he's unprofessional for not wanting to accept unprofessional attitude by his clients?
–
JasMar 10 '11 at 14:27

11

No he's unprofessional because he overreacted and burned a bridge. Like @Joel said, if you're a contractor, expect 60 day swings in pay. If you want a regular paycheck, get a job.
–
jmort253Mar 10 '11 at 14:51

13

@Jas - As a contractor, my level of professionalism is not dictated by any outside resource. It is dictated by my own personal standards and how I wish to be perceived. I have had many clients whose attitudes were unprofessional, some even outright hostile, but I never let it remove my professionalism from me.
–
Joel EthertonMar 10 '11 at 14:54

3

@Jas: Professionalism is partly about being able to deal with others in a professional manner.
–
David ThornleyMar 10 '11 at 14:54

I have been running a web development company for about 2 years. I have made it a rule for myself to always take 50% in advance and 50% before the project is handed over. This way I never run into problems. Companies tried to make me bend my rule for them ( some by trying to act cheeky ) and I'll share this secret with you 'don't bend...ever'

+1 - retainers are always wise, and payment before transfer is not a bad idea either. The grocery store doesn't let me take the food home until I pay for it, why should software be any different?
–
Joel EthertonMar 10 '11 at 12:45

2

As a contractor you get paid for you hours in arrears post invoice. Its pretty much as simple as that.
–
MurphMar 10 '11 at 13:12

1

As a contractor you get paid when and how you want, because you get to specify the business model for your service. I also require payment on delivery and 50% up front on most projects. I get pushback, but have NEVER not gotten paid, nor have I had the unpleasantness of collections. YMMV, but don't think that net 30 or net 60 is anything you have to accept.
–
PlynxOct 18 '11 at 0:17

This is a difficult question and I don't think there is an answer that will fit all situations.

Some clients definitely require a strict no-pay-no-work policy like you showed. They are the weasely type, always short on money, and they generally wait with their payments till the very last possible moment. On the other hand, they will accept your behaviour (because they play the same game with every other contractor, and guess how long it takes till the cellular operator disconnects your phone if you forget to pay...), pay quickly and expect you to resume your work as if nothing happened.

Other clients are extremely annoyed about such a behaviour, since it shows a lack of confidence in them, and will at least kick you out, and possibly create more legal problems like claiming damages for the unfinished work etc.

I was fuming about the first that they messed up, made it look like it was my umbrella company's fault which I had arguments with them, to then later find out that it wasn't my umbrella company's fault at all. I let that slide. Then a late messed up payment the following month, well, it sent me so mad (repressed issues from the previous month also) that I just had to walk out until they pay up.
–
Martin BloreMar 10 '11 at 13:14

As someone who's contract for years in the UK I'm not convinced that you've done the right thing.

Normally the setup in the UK is your company -> agency -> client. That's generally for legal reasons to keep you at arms length so you can't suddenly claim you're actually an employee.

So, the next question then is - who hasn't paid your company? The agency? Because the client shouldn't be paying you direct in the above scenario. Unfortunately in this business it's not unusual for some of the, shall we say, shadier agencies to conveniently forget to pay their counterparties on time, even if their client has paid them on time. If the agent hasn't been payed by the client, then that's usually not your problem unless your contract included a clause that they won't pay you until the client paid (which I usually refused to sign). The important part here is what the contract says about late payments (if anything), and it is also important how late the payment was.

In other words, this isn't a labour dispute per se, it's a payment dispute between two companies (which isn't made easier by the fact that you seem to be using an umbrella company if I read your comments correctly, IMHO that makes matters worse). The problem is now that walking off can be viewed as a legitimate breach of contract, especially given that a late payment isn't necessarily a breach of contract on their end. It might be if they don't pay you at all and if your contract says that you get paid X days after they receive your invoice, a decent lawyer should be able to light a fire under their backsides, but that's a different issue.

What would I have done in this situation?

If the payment was late by a few days, I would have (and have) explained to the agency in very clear words that I expect to receive the payment when they're supposed to send it unless they want me to go look for another contract (you have the ability to give notice from your end, right?). They don't like that a lot as that means less profits for them and they can get in hot water with the clients too, if that happens more than one.

If they're more than a few days late I point out to them that I expect them to pay interest for the late payment - IIRC Labour enacted a couple of laws to help small businesses collect their money within a certain amount of time, but I don't know if they're still in force. Oh, and they get that in writing, by recorded delivery, quoting the appropriate laws.

If they're really late - like over a month - they get to have an unpleasant chat with my lawyer (your accountant should be able to recommend one). At that point I also tended to have a quiet word with the client to let them know what's going on. That tends to help things along, too.

If all of that doesn't help, I would also point out to the client that they're unfortunately not going to be able to count on my services much longer unless the agency gets their act together. Never had to go to this step.

Just walking off because your agency is a few days late with the payment can get you into very hot water, up to getting sued for breach of contract. Remember, you're acting on behalf of your business now and that's a whole different kettle of fish. You might be on the same highwire, but someone's taken away the net and filled the pool with sharks.

Also, as a contractor you simply have to have enough money put aside to weather a month or two without pay, if you don't you're neck deep into smelly brown stuff very quickly.

This could go either way. Either you can say they are in violation of the contractual agreement you had with them and thus you will be unable to finish work or they will turn around and say the same of you. Irregardless of that outcome if you need a reference for contracting work again you will be unable to use them in the future. However, it sounds like you won't want to use them anyways. People that can't pay on time or attempt to benefit themselves at the expense of others seldom give great reviews.

From the info that you have given, it doesn't seem a very wise move. As a contractor you need goodwill of your client because of return business as well as positive word of mouth, this is esp important if you have just started on your own. Which is why unless your Client is an absolute pain (which doesn't seem from the description), it's better to bear with the mess ups.

Did you follow the correct procedure for lodging the concern? If you were hired through an agency they might have been able to help you, whether it was escalating your concern through proper channels, an advance,or possibly some other remedy until your pay schedule is straightened out. If it was through an agency, they can be a willing partner, as your performance reflects on them, good or bad.

Me -> Umbrella Company -> Client. I am
an employee of the Umbrella Company
who's terms are that I do not get paid
unless the client paid up.

Bad company. If you don't get the job done, its ok that the client or your employer may want to delay your payment or finish contract with you.

But, if you get the job done, and the final customer won't pay, then its your employer responsability to pay you. Otherwise, why do you need Umbrella ?

Many freelancers or contractors deal directly with the customer, and many times, they actually, give some time to the customer, due to harsh times. But, having an intermediate that gets a comission, and doesn't take responsability, its crap.

You have to paid for food, house, gas, car, taking wife to fancy restaurant once a month, children school, dog / cat food. Right ?

You could talk to Umbrella to others options (kill some zombies for extra bonus), but, still, walking out, suppousing you get the job done, was a good choice.

Walking out is not professional. If money is that important to where you can't approach the client and try to resolve the dispute, then you shouldn't be working as a freelancer. In fact, you shouldn't be working in any position that requires you to negotiate with another party.
–
jmort253Mar 11 '11 at 8:27

1

I didn't mention walking out as a freelancer, but, as an employee of other company. There is a big important difference. The intermediate company should be responsible for make sure the job is done to the customer, and that the employee is paid. And contracts mentioned in the original post are actually illegal in some estates / countries. If the employee couldn't finish the job, for any reason, dead, sick, irresponsible, the intermediate company should be responsible. But, the same goes the way back, when the customer cannot pay.
–
umlcatMar 11 '11 at 15:53